Foreign Assets Disclosure Scheme 2026: ₹1 Crore Penalty Rules

The foreign assets disclosure scheme 2026, officially FAST-DS, lets you fix undisclosed foreign income or assets for 60% of the value instead of the Black Money Act's 120%. But this only works if your case fits inside the ₹1 crore (Category A) or ₹5 crore (Category B) limits, and the window itself hasn't opened yet.

Table of Contents

• What Is the Foreign Assets Disclosure Scheme 2026?

• Who Does FAST-DS 2026 Apply To?

• FAST-DS 2026 Rates and the ₹1 Crore Rule

• What Your Number Actually Looks Like

• Worked Examples With Real Numbers

• How to Calculate Your Payable Amount

• What If Something Goes Wrong?

• Documents You Will Need

• Penalties If You Skip This Scheme

• Frequently Asked Questions

Got an SMS or email from the tax department about a foreign account lately? You're not the only one, and this article tells you exactly why.

What Is the Foreign Assets Disclosure Scheme 2026?

FAST-DS stands for the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026. It's a one-time, six-month window that lets small taxpayers regularise foreign income or assets they never reported, or reported incompletely.

The scheme is codified as Chapter IV, Sections 130 to 144, of the Finance Act, 2026, per the official Income Tax Department portal. It sits alongside, and offers relief from, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, commonly called the Black Money Act or BMA, which is a separate law from the Income-tax Act. Since FAST-DS lives inside the Finance Act rather than the Income-tax Act, it isn't affected by the 1961-to-2025 renumbering. But some cross-references inside it point to ordinary return-filing rules. Those sit at Section 139 under the old 1961 Act for years up to FY 2025-26, and at Section 263(1)(x) of the new Income-tax Act, 2025 for later filings.

This scheme deals with non-disclosure going back several years, so treat any section reference in your own case as needing a fresh check against the specific year it relates to.

Who Does FAST-DS 2026 Apply To?

Here's a partial case worth knowing: if you're an NRI today but were a resident in the year the income arose or the asset was bought, the scheme still looks at that year's status, not your status now. Our FAST-DS 2026 eligibility guide breaks down the Category A and B split in more depth, with two more worked examples, if you're still unsure which bucket applies to you.

FAST-DS 2026 Rates and the ₹1 Crore Rule

Here's the part most guides gloss over: real numbers, sourced directly from the PIB Budget 2026-27 press release.

Category A: never disclosed, never taxed, up to ₹1 crore. You pay 30% of the fair market value, or 30% of the undisclosed income, as tax. On top of that, you pay another 30% as an additional charge instead of penalty. That's 60% total. In return, you get immunity from prosecution.

Category B: already taxed, only Schedule FA missed, up to ₹5 crore. You pay a flat fee of ₹1 lakh. The PIB release states this directly as "payment of fee of 1 lakh rupees," which settles a real disagreement floating around online about whether the fee applies per asset or once per declaration.

Whether that ₹1 lakh figure changes if a declarant holds several unrelated assets is still open, since CBDT hasn't notified the detailed rules yet. Treat the "one flat fee" reading as the current best evidence, not a locked-in guarantee, until those rules land.

Where does the foreign assets disclosure scheme 2026 stand right now? As of this writing, the scheme exists in law. Section 130(2) of the Finance Act itself says it "shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint." That notification hasn't happened yet. Watch the Income Tax e-Filing portal and the Official Gazette, not social media rumours, for the real start date. Any declaration filed before that date would be invalid.

What Your Number Actually Looks Like

Nobody shows this across a range of values, so here it is.

Cross ₹1 crore and you fall out of Category A entirely, unless the asset qualifies for Category B instead, where the flat ₹1 lakh fee changes the maths completely. Priya's example below shows exactly how.

Why does this matter beyond the arithmetic? India now has data-sharing agreements with more than 100 countries under the Common Reporting Standard and FATCA. CBDT's "NUDGE" campaign has already flagged around 25,000 taxpayers, sending them SMS and email alerts about mismatched foreign asset data. Got one of those messages? This scheme is very likely the reason.

Worked Examples With Real Numbers

Example 1: the common case, Category A. Ramesh worked in Germany for two years and earned ₹40 lakh in foreign salary that he never reported in any Indian ITR. He's a resident now, and this income was never taxed here.

His calculation: 30% of ₹40 lakh is ₹12 lakh in tax, plus 30% of ₹40 lakh is another ₹12 lakh as the additional charge. Total payable: ₹24 lakh.

Without FAST-DS, he'd face 30% tax (₹12 lakh) plus a 90% penalty (₹36 lakh), for ₹48 lakh total, with prosecution risk on top. Ramesh saves ₹24 lakh and closes the matter for good.

Example 2: the edge case competitors skip, Category B. Priya paid full Indian tax every year on her US employer's RSUs and correctly reported the vesting income under Schedule OS. Her CA, though, never filled in Schedule FA for the brokerage account holding those shares, now worth ₹2.3 crore.

Since her income was taxed properly and only the asset disclosure slipped through, she falls under Category B. And since ₹2.3 crore sits comfortably inside the ₹5 crore ceiling, her payment is a flat ₹1 lakh, regardless of the ₹2.3 crore value. Compare that to Section 43 of the Black Money Act, which could otherwise hit her with a ₹10 lakh penalty for the exact same Schedule FA gap. She saves ₹9 lakh and gets both penalty and prosecution immunity.

How to Calculate Your Payable Amount

Since CBDT hasn't notified the declaration form yet, here's the formula worth keeping ready.

Category A: Payable = (fair market value or undisclosed income) × 0.60

Category B: Payable = a flat ₹1 lakh per declaration, as long as total asset value stays under ₹5 crore.

Do this before the window opens, not after:

1. List every foreign asset you hold: bank accounts, ESOPs or RSUs, brokerage holdings, foreign property, and insurance with cash value.

2. Check each year's ITR. Was the income taxed? Was Schedule FA actually filled in?

3. Sort every asset into Category A or B, based on whether tax was ever paid on it in India.

4. Get a fair market valuation ready for whichever date the eventual rules specify, since this hasn't been confirmed by CBDT yet.

5. Bookmark the official Income Tax e-Filing portal, since that's where the commencement notification will appear first.

What If Something Goes Wrong?

You missed a Schedule FA entry on an asset built from already-taxed money, and the window isn't open yet. You don't have to wait for FAST-DS. You may be able to fix it right now through an ordinary revised or updated return, since the revision deadline now runs to 31 March with a nominal fee. Talk to a CA about whether a revised return closes the gap before FAST-DS even opens.

Your holdings straddle both categories. Some assets were never taxed, and others just missed Schedule FA. You'll likely need to sort each one and possibly file separate declarations for each category rather than one combined filing, since CBDT hasn't clarified the exact filing mechanics yet.

You already got a NUDGE SMS or email from the tax department. That doesn't automatically disqualify you, but it does mean the department already has data on you. Don't assume you're excluded from FAST-DS just because you were contacted, and don't assume you're safe if you ignore it either. Get the notice reviewed against the scheme's exclusion rules before deciding either way.

Documents You Will Need

• PAN and proof of your residential status for each relevant year

• Bank statements or account-opening documents for every foreign account

• ESOP or RSU vesting statements, plus Form 16 or Form 26AS showing tax already paid, for Category B claims

• Property papers for any foreign immovable asset

• Past ITRs and Schedule FA filings, or proof none was filed, for Category A

• Fair market valuation as on the prescribed date, once notified

Digital copies are expected to be accepted, since the declaration will likely be e-filed. This will only be confirmed once CBDT notifies the exact form.

Penalties If You Skip This Scheme

Stay outside FAST-DS, and you're back under the full weight of the Black Money Act, 2015.

• Section 42: ₹10 lakh penalty for a resident who fails to file a return under Section 139(1) of the Income-tax Act, 1961, for a year in which they held a foreign asset or had foreign income.

• Section 43: ₹10 lakh penalty for furnishing inaccurate or incomplete Schedule FA particulars in a return already filed.

• Exemption: Both penalties are waived if your total foreign movable assets, excluding immovable property, don't cross ₹20 lakh at any point in the year. This threshold was raised from ₹5 lakh by the Finance (No. 2) Act, 2024.

• Sections 3 and 41: A flat 30% tax on the undisclosed asset's value, plus a further penalty equal to three times that tax, or 90%, for 120% total exposure. No deductions or set-offs are allowed.

• Sections 49 and 50: Criminal prosecution, including possible imprisonment, though the Finance Bill 2026 proposes this won't apply where undisclosed movable foreign assets, excluding immovable property, total under ₹20 lakh.

Frequently Asked Questions

Is the FAST-DS 2026 window open right now?

No. Section 130(2) of the Finance Act, 2026 says it starts only on a date the Central Government notifies through the Official Gazette. That date isn't out yet, and filing before it would be invalid.

What's the Black Money Act ₹10 lakh penalty, exactly?

It's a flat penalty under Sections 42 or 43 of the BMA for failing to file a return, or for inaccurate Schedule FA disclosure. It applies per year of default and is waived below the ₹20 lakh movable-asset threshold.

Is a dormant foreign bank account taxable in India?

The balance itself isn't income, but skipping it in Schedule FA can still trigger the ₹10 lakh Section 43 penalty. Any interest earned on it is taxable and needs reporting under Schedule FSI.

What happens if my undisclosed foreign asset is worth more than ₹1 crore?

You fall outside Category A. Check whether it fits Category B instead, where already-taxed income up to ₹5 crore qualifies. If it fits neither, the full Black Money Act provisions apply.

Are foreign ESOPs and RSUs covered under this scheme?

Yes. A vested foreign ESOP or RSU counts as a foreign financial asset. Whether it falls under Category A or B depends on whether the vesting income was already taxed here.

I filed my ITR but forgot Schedule FA. Am I automatically in trouble?

Not automatically, but you're exposed to the Section 43 penalty until it's fixed. If the underlying income was properly taxed, Category B, or a revised return before the window opens, is your practical fix.

Does FAST-DS 2026 replace the Black Money Act?

No. It's a temporary six-month window that sits alongside the BMA. Once it closes, the standard 120% liability and prosecution provisions return in full.

Can NRIs use the foreign assets disclosure scheme 2026?

Yes, as long as they were resident in India in the year the asset was acquired or the income arose, even if they're currently classified as NRI.

Is there a Category B fee for each separate asset, or one fee in total?

The PIB Budget release describes it as a single flat ₹1 lakh fee per declaration, not a per-asset charge. This still needs re-confirmation once CBDT notifies the detailed rules.

What if I already got a NUDGE message about my foreign account?

Don't ignore it. It usually means your account details were shared under an international data-exchange agreement. It doesn't automatically block you from FAST-DS, but it does mean the department already has your data, so acting sooner is safer than waiting.

What to Do Right Now

Sort every foreign asset you hold into Category A or B using the tables above, and get your fair market valuation and old ITRs ready before the window opens. Our FAST-DS 2026 eligibility deep-dive can help you settle borderline Category A versus B calls. If part of your income was foreign-sourced, the Form 67 foreign tax credit calculator shows what tax you've already paid before you commit to a category. Track the real commencement date only on the official Income Tax e-Filing portal.

For educational purposes only. Verify all figures at official sources before acting. Toolisky is not affiliated with any government body. Consult a qualified CA or legal professional before making compliance decisions. See toolisky.com/accuracy-and-limitations.